An investment bank has warned that a triple whammy of a dip in consumer confidence, growing supermarket alcohol discounting and over-capacity in eating out venues will create a difficult 2008.
JP Morgan told its clients yesterday that pub share values had fallen by an average of 36% during 2007 as the smoking ban and the credit crunch hit. The combination of economic and market conditions had created a "perfect storm" in the sector.
Analyst James Ainley said: "Caution on the consumer, a re-ignition of supermarket discounting and continued eating-out capacity growth all conspire to make us cautious."
Ainley also warned that predictions of steady trading after the smoking ban were "too optimistic" in the light of a downturn in customer spending.
He did offer a chink of light to pure restaurant operators, claiming businesses such as The Restaurant Group were better protected against the "vagaries of the smoking ban".
By Christopher Walton